ORGANIZATION & MANAGEMENT

&
PRINCIPAL OF MANAGEMENT

R.S gupta
B.D. sharma
N.S. bhalla
 CONCEPT OF MANAGEMENT
• It involves all kind of activities which determine the
objectives of the organization. It creates an
environment for the achievement of these objectives
with the help of various function.

The term ‘MANAGEMENT’ is also used as

a process, as a group, as a discipline and as a
activity.
• MANAGEMENT : A PROCESS
it is a process which include all the activities.
The management process comprises all functions
which transform marketing and management into
products and services to satisfy the consumers needs.
The resources as a whole are termed as 7 m’s.
Thus the mgt. process comprises of functions such as
planning, organizing, staffing, directing and
controlling.
FEATURES OF MGT. : AS A PROCESS
 Continuous process : task of manager does not finish …
his job again start with the planning function and so on.
(problem and solving them by taking adequate steps.)
 Integrating process: all the function of mgt are
integrating the human and material resources for
attaining the goals of an org.
 Social process: managers deals with human being. A
manager directs co-ordinates and control the activities
of human being in order to achieve the pre-determined
goals. (developing relationship among people)
• Universal process: the principle of management
are applicable of all types of enterprises whether
small or big unit such as MNC’s.
• Interactive process: the function of management
are interwoven i.e. two or more functions
performed at a time.
 MANAGEMENT: A GROUP
• Management as a group refers to those who carry
the activities of management. So it consist all of
those persons who are managing the affairs of the
business enterprise .
therefore, the term management
represents the group of people; from chairman to
supervisor.
The word ‘MANAGEMENT’ also connotes as top
management.
Chief executives or chairman of board, board of
directors, managing director etc. because the real
decision making authority lies with the top level of
management.
 MANAGEMENT AS : A DISCIPLINE
Mgt. has developed as a full fledged discipline in the
due course of time. The knowledge of
management is being developed by number of
scholars and it being formally taught to the
students of management. It include the specialized
functional courses…..
Financial mgt
Personnel mgt
Marketing mgt etc.
 MANAGEMENT AS AN : ACTIVITY
• The functional aspect of mgt. is to organize the human
and the material resource to achieve the objective of
the enterprise. In this process the managers have to
perform many activities.
 Communication
 Decision making
 Human relations
 CHARACTERISTICS OF MGT
• It is a process
• It is a social process (relations among the people)
• Group effort
• Attainment of pre-determined objectives
• It is a system of authority
• Universality of management
• It is needed at all levels
• It is a discipline
• It is an integrative process
 OBJECTIVES (OR PURPOSE) OF MGT
• Optimum utilization of resources
• Growth and development of business
• Better quality goods
• Ensuring regular supply of goods
• Discipline and morale
• Mobilizing best talent
• Promotion of research and development
• Minimize the element of the risk
• Improving performance
• Planning for future
 Nature of Organisation:

• Process:
Organisation is a process of defining, arranging and
grouping the activities of an enterprise and
establishing the authority relationships among the
persons performing these activities.
• Structure:
The function of organising is the creation of a structural
framework of duties and responsibilities to be
performed by a group of people for the attainment of
the objectives of the concern.
• Dividing and Grouping the Activities:
Organising means the way in which the parts of an
enterprise are put into working order. In doing such,
it calls for the determination of parts and integration
of one complete whole on the other.
• Accomplishment of Goals or Objectives:
An organisation structure has no mean­ing or purpose
unless it is built around certain clear-cut goals or
objectives.
• Authority-Responsibility Relationship:
An organisation structure consists of vari­ous positions
arranged in a hierarchy with a clear definition of the
authority and responsibility associated with each of
these.
• Human and Material Aspects:
Organisation deals with the human and material factors
in business. Human element is the most important
element in an organisation. To accomplish the task of
building up a sound organisation, it is essential to
prepare an outline of the organisation which is
logical and simple. The manager should then try to fit
in suitable men.
• Importance and Significance of Organisation:
All business and non-business enterprises require
sound organisation for their smooth, efficient and
economical operation to achieve maximum results
with minimum of cost and efforts
 Importance of Management

• It helps in Achieving Group Goals - It arranges the

factors of production, assembles and organizes the
resources, integrates the resources in effective
manner to achieve goals. It directs group efforts
towards achievement of pre-determined goals.

• Optimum Utilization of Resources - Management

utilizes all the physical & human resources
productively. This leads to efficacy in management.
• Reduces Costs - It gets maximum results through
minimum input by proper planning and by using
minimum input & getting maximum output.

• Establishes Sound Organization - No overlapping of

efforts (smooth and coordinated functions). To establish
sound organizational structure is one of the objective of
management which is in tune with objective of
organization and for fulfilment of this, it establishes
effective authority & responsibility relationship
• Establishes Equilibrium - It enables the organization
to survive in changing environment. It keeps in touch
with the changing environment.
 Process of Management
PLANNING : It is a planning to deciding a goal and
formulating the policies and procedures to achieve the
goals. How many numbers of employees should be
selected (how much work will be assign them?)
• Evaluate the different alternatives and choose the best.
• It visualize the future problem and keep management
ready with possible solution.
• The determination of personnel programs that will
contribute to the goals of the enterprise, i.e., anticipating
vacancies, planning job requirements, job descriptions
and determination of the sources of recruitment.
ORGANISING : Process of allocating the task among the
members of the group.
• Establishing authority, responsibility relationships
among them and integrated the activities towards the
common objectives.
• Once the HR has established objectives and developed
plans, he must design and develop organisation
structure to carry out the various operations.
• Assign the different functions to the different
individuals
DIRECTING:
• It is the process of motivating, leading and supervising
people.

• The direction function of the personnel manager

involves encouraging people to work willingly and
effectively for the goals of the enterprise.

• HR can tap the maximum potential of his subordinates

through proper direction.
CONTROLLING:
• How employees are performing ?
• Judging and verifying their performance. If
improvement is needed, then take correct
action as needed.
• It is the process of setting standards for
performance, checking to see how actual
performance compare with these sets
standards.
 Managerial roles (Mintzberg)
 Interpersonal Relationship : it relates to the manager
contact and dealing with other people.
• As a figure head: As a manager, you have social,
ceremonial and legal responsibilities. You're expected to be
a source of inspiration. People look up to you as a person
with authority, and as a figurehead.
• Leader – This is where you provide leadership for your
team, your department or perhaps your entire
organization; and it's where you manage the performance
and responsibilities of everyone in the group.
• Liaison officer – Managers must communicate with
internal and external contacts. You need to be able to
network effectively on behalf of your organization.
 Informational Management Roles
The managerial roles in this category
involve processing information.
• Monitor – In this role, you regularly seek out
information related to your organization and industry,
looking for relevant changes in the environment. You
also monitor your team, in terms of both their
productivity, and their well-being.
• Disseminator – This is where you communicate
potentially useful information to your colleagues and
your team.
• Spokesperson – Managers represent and speak for their
organization. In this role, you're responsible for
transmitting information about your organization and its
goals to the people outside it.
 Decisional Management Roles

The managerial roles in this category involve using information.

• Entrepreneur – As a manager, you create and control change
within the organization. This means solving problems,
generating new ideas, and implementing them.
• Disturbance Handler – When an organization or team hits an
unexpected roadblock, it's the manager who must take charge.
You also need to help mediate disputes within it.
• Resource Allocator – You'll also need to determine where
organizational resources are best applied. This involves
allocating funding, as well as assigning staff and other
organizational resources.
• Negotiator – You may be needed to take part in, and direct,
important negotiations within your team, department, or
organization.
 Functional Areas of Management

• Personnel Management
• Financial Management
• Marketing Management
• Production Management
• Purchase Management
• Development Management
• Maintenance Management
• Office Management
• Personnel Management: All means of production
(men, materials, machines, money, etc.) may be
divided into two parts – active and passive. Active
means include men while machines, materials,
money etc. belong to passive means of production.
Personnel Management is that branch of management
which is concerned with the recruitment, selection,
development and the optimum use of the
employees. In other words, personnel management
is concerned with the employees engaged at all
levels of an organisation.
• Financial Management: The major objective of any
business concern is to make profit for its owners by
selling goods or services. To reach this goal finance is
required. In this context it can be said that finance is
the soul of any business concern. Keeping this in
view, the proper management of finance is
absolutely necessary.

• Marketing Management: Marketing management

refers to all managerial activities relating to
marketing. Marketing includes all those activities
ranging from knowing the needs of the consumers to
their satisfaction.
• Production Management: The production
management is needed by the manufacturing
organisations. These organisations change the form
of the raw material and make it more useful.

• Purchase Management: Purchase management

means planning and controlling purchase. It means
to determine as to what goods are to be purchased,
where to purchase from, when to purchase, etc.
• Development Management: Development
management is related with the management of
research activities.
The following activities are performed under it:
• To develop new production process,
• To carry on research in relation to the goods,
machines and implements used in the process of
production,
• To develop new products,
• To discover new substitutes for raw material, etc.
• Maintenance Management: It is the responsibility of
this functional area of management to keep the
organisation in working condition. If the building and
the machines of the factory are not in proper
condition, the efficiency of the employees will
certainly be reduced

• Office Management: Office means a place for where

the different activities of the organisation are
planned and controlled. To run this place in a
planned manner is called office management. It is
the place from where the employees are given
directions and guidance.
Development of Management Thoughts

Classical Theories (शास्त्रीय सिद्धांत)

• Scientific Theory
• Administrative Theory
• Bureaucracy Theory
• Neo –classical theory (नव-शास्त्रीय सिद्धांत)
Include behavioral science business in business
management …mgt aims to develop social and
leadership skills along with technical skills
• Modern Theory (आधुनिक सिद्धांत)
Describe organization as an open system that
interacts with the environments to survive…
Classical theory :
These are traditional theories or old theories which
emphasized on organizational structure rather than
employees working therein.
(ये पारंपरिक सिद्धांत या पुराने सिद्धांत हैं जो इसमें काम करने वाले कर्मचारियों के
बजाय संगठनात्मक संरचना पर जोर देते हैं।)

Focus is on structure , order, economic factors and

superior’s authority. (ध्यान संरचना, व्यवस्था, आर्थिक कारकों और श्रेष्ठ
के अधिकार पर है)

It views orga. As a machine and human beings as part of

machine (यह देखता है org. मशीन के रूप में और मशीन के हिस्से के रूप में मनुष्य )
Classical management theory based on the belief that
workers only have physical and economic needs and
prescribes specialization of labor. Classical theories
recommend centralized leadership and decision-making
and focus on profit maximization.

(शास्त्रीय प्रबंधन सिद्धांत इस विश्वास पर आधारित है कि श्रमिकों की के वल शारीरिक

और आर्थिक जरूरतें होती हैं और श्रम की विशेषज्ञता निर्धारित करती है। शास्त्रीय
सिद्धांत कें द्रीकृ त नेतृत्व और निर्णय लेने की सलाह देते हैं और लाभ को अधिकतम
करने पर ध्यान कें द्रित करते हैं।)

The classical writers viewed organization as a machine and

human being as components of that machine. (शास्त्रीय लेखक
संगठन को एक मशीन के रूप में और मनुष्य को उस मशीन के घटकों के रूप में देखते
थे। )
Efficiency of the org. increases with efficiency of
human beings.(संगठन की दक्षता। मनुष्य की दक्षता के साथ बढ़ता है)

Specialization and co-ordination of activities. ( गतिविधियों

की विशेषज्ञता और समन्वय।)

Henry Fayol, Luther Gullick, Oliver Sheldon, Urwick ,

Mooney & Reiley gave the principles of organization
(हेनरी फे योल, लूथर गुलिक, ओलिवर शेल्डन, उरविक, मूनी और रेली ने
संगठन के सिद्धांत दिए)
 6 Elements of Classical Theory
(शास्त्रीय सिद्धांत के 6 तत्व)

1. Division of labor: In order to improve the

performance of individual workers, the organization
must divide work.

(श्रम का विभाजन: व्यक्तिगत श्रमिकों के प्रदर्शन को बेहतर बनाने के लिए, संगठन

को काम को विभाजित करना होगा।)
2. Scalar and Functional Process: grading of duties
acc. to the degree of authority and responsibility
and generates superior-subordinate relationships,
this process deals with the division of org. into
specialized parts or departments and regrouping
of the parts into units.
(स्के लर और कार्यात्मक प्रक्रिया: कर्तव्यों की ग्रेडिंग एसीसी। अधिकार और
जिम्मेदारी की डिग्री तक और बेहतर-अधीनस्थ संबंध उत्पन्न करता है, यह
प्रक्रिया संगठन के विभाजन से संबंधित है। विशेष भागों या विभागों में और
भागों को इकाइयों में पुनर्समूहित करना।)
3. Coordination : between the employees in the orga. At
all levels.
(समन्वय: संगठन में कर्मचारियों के बीच। सभी स्तरों पर।)

4. Structure : Org. has proper structure . Each position

is assigned a specific task and authority is delegated
for its accomplishment which complete the structure.
(संरचना: संगठन। उचित संरचना है। प्रत्येक पद को एक विशिष्ट कार्य सौंपा जाता है
और उसकी उपलब्धि के लिए अधिकार दिया जाता है जो संरचना को पूरा करता
है।)
4 Departmentalization: create diff-diff departments on a basis
Exp: college: diff departments on the basis of subjects
Similarly diff depart. In an orga. Like: production, marketing,
finance, HR, purchase.
(विभागीयकरण: एक आधार पर भिन्न-भिन्न विभागों का निर्माण Expक्स्प: कॉलेज: विषयों के
आधार पर अलग-अलग विभाग इसी तरह अलग प्रस्थान। जैसे: उत्पादन, विपणन, वित्त,
मानव संसाधन, खरीद।)

6 Span of Control: number of subordinates a manager can

control ….
How many subordinates can supervise by manager at a time.?
(नियंत्रण की अवधि: एक प्रबंधक द्वारा नियंत्रित किए जा सकने वाले अधीनस्थों की संख्या…।
एक समय में प्रबंधक द्वारा कितने अधीनस्थ पर्यवेक्षण कर सकते हैं? )
The 14 principles of Organization given by Henry Fayol,
the father of the “ Principles School of Management “
in his book “ Industrial and General Administration
1. Division of work काम का विभाजन
2. Authority and Responsibility अधिकार और जिम्मेदारी
3. Discipline अनुशासन
4. Unity of Command आदेश की एकता
5. Unity of Direction दिशा की एकता
6. Subordination of Individual to General Interest सामान्य हित के
लिए व्यक्ति की अधीनता
7. Remuneration :pay should be fair to both org. and
employee पारिश्रमिक : वेतन दोनों संगठनों के लिए उचित होना चाहिए।
8. Centralization n Decentralization कें द्रीकरण एन विकें द्रीकरण
9. Scalar Chain
10. Order: Right man in the right place आदेश: सही जगह पर सही आदमी
11. Equity : combination of kindness and justice…creates
loyalty and devotion in the employees toward the
organization
(समानता: दया और न्याय का संयोजन... कर्मचारियों में संगठन के प्रति निष्ठा और
समर्पण पैदा करता है)

12. Stability of tenure : An employee needs time to learn

his job and to become efficient…employees should
have job security because instability leads to
inefficiency.
(कार्यकाल की स्थिरता : एक कर्मचारी को अपना काम सीखने और कु शल बनने के लिए
समय की आवश्यकता होती है ... कर्मचारियों के पास नौकरी की सुरक्षा होनी चाहिए
क्योंकि अस्थिरता अक्षमता की ओर ले जाती है।)
13. Initiative : all levels of staff should be encouraged
to show initiative. (पहल: सभी स्तरों के कर्मचारियों को पहल
दिखाने के लिए प्रोत्साहित किया जाना चाहिए)

14. Esprit de corps: “Team spirit” the management

should create unity , co-operation and team spirit
among employees. (एस्प्रिट डी कॉर्प्स: "टीम भावना" प्रबंधन को
कर्मचारियों के बीच एकता, सहयोग और टीम भावना पैदा करनी चाहिए)
 Types of classical Theory
• Bureaucratic Theory of Management (Max Weber )
प्रबंधन का नौकरशाही सिद्धांत (मैक्स वेबर)

• Administrative Management Theory (Henri Fayol)

प्रशासनिक प्रबंधन सिद्धांत (हेनरी फे योल)

• Theory of Scientific Management (Frederick Taylor)

वैज्ञानिक प्रबंधन का सिद्धांत (फ्रे डरिक टेलर)
 Bureaucratic Theory of Management
(Max Weber)
It is an organizational structure that is characterized by
many rules, procedures and requirements , number of
desks, thorough division of labor and responsibility
clear hierarchies and professional , almost interpersonal
interactions between employees.
(यह एक संगठनात्मक संरचना है जो कई नियमों, मानकीकृ त प्रक्रियाओं, प्रक्रियाओं और
आवश्यकताओं, डेस्क की संख्या, श्रम का संपूर्ण विभाजन और जिम्मेदारी स्पष्ट
पदानुक्रम और पेशेवर, कर्मचारियों के बीच लगभग पारस्परिक बातचीत की विशेषता
है। )

Rules, regulations, rigid hierarchy and specialized

functions are important feature of bureaucracy
Max Weber believed that Bureaucracy was a better than
traditional structures. In a Bureaucratic organization,
everyone is treated equal and the division of labor is
clearly described for each employee.
(मैक्स वेबर का मानना था​ कि नौकरशाही पारंपरिक संरचनाओं से बेहतर है। एक
नौकरशाही संगठन में, सभी के साथ समान व्यवहार किया जाता है और प्रत्येक
कर्मचारी के लिए श्रम विभाजन का स्पष्ट रूप से वर्णन किया जाता है।)

In addition, in a bureaucratic organization , selection

and promotion only occur on the basis of technical
qualifications.
(इसके अलावा, एक नौकरशाही संगठन में, तकनीकी योग्यता के आधार पर ही चयन
और पदोन्नति होती है।)
• The orga is based on the principles of structure,
specialization, predictability and stability, rationality
and democracy.

• The theory defines clear procedures, methods rules

and regulations to carry out business operations
and transactions.

• Weber’s bureaucratic approach considers the

organization as a art of broader society.
 2. Administrative Management Theory
(Henry Fayol)
• Fayol is considered the father of Administrative Management
Theory, often called Process Theory or Structural Theory.

• Fayol focused on organization and structure of work tasks. He

looked specifically at how management and workers are
organized within a business to allow for the completion of the
tasks.

• Fayol followed a top-down approach to organizational

efficiency . He believed that the effective organization of
management would ultimately have an effect on the
productivity of operational-level workers.
• Fayol is considered the father of Administrative Management
Theory, often called Process Theory or Structural Theory.

• Fayol focused on organization and structure of work tasks. He

looked specifically at how management and workers are
organized within a business to allow for the completion of the
tasks.

• Fayol followed a top-down approach to organizational

efficiency . He believed that the effective organization of
management would ultimately have an effect on the
productivity of operational-level workers.
• Henry Fayol gave 14 principles of Management

• Functions of a Manager:
1. Planning
2. Organizing
3. Commanding
4. Coordinating
5. Controlling
 3.Scientific Management Theory
• Its main objective is improving economic efficiency,
especially labor productivity. It was one of the
earliest attempts to apply science to the engineering
of processes to management.
• The major emphasis is on increasing the production
through the use of intensive technology, and the
human beings are just considered as adjuncts to
machines in the performance of routine tasks.
FW Taylor Principles of Scientific Management

• Science, not the Rule of Thumb-

This rule focuses on increasing the efficiency of an
organisation through scientific analysis of work
and not with the ‘Rule of Thumb’ method. Taylor
believed that even a small activity like loading
paper sheets into boxcars can be planned
scientifically. This will save time and also human
energy. This decision should be based on
scientific analysis and cause and effect
• Harmony, Not Discord-
Taylor indicated and believed that the
relationship between the workers and
management should be cordial and
completely harmonious. Difference between
the two will never be beneficial to either side.
Management and workers should
acknowledge and understand each other’s
importance.
• Mental Revolution-
This technique involves a shift of attitude of
management and workers towards each other.
Both should understand the value of each
other and work with full participation and
cooperation. The aim of both should be to
improve and boost the profits of the
organisation.
• Cooperation, not Individualism-
It is similar to ‘Harmony, not discord’ and believes in
mutual collaboration between workers and the
management. Managers and workers should have mutual
cooperation and confidence and a sense of goodwill.

• Development of Every Person to his Greatest Efficiency-

The effectiveness of a company also relies on the abilities
and skills of its employees. Thus, implementing training,
learning best practices and technology, is the scientific
approach to brush up the employee skill.
 Neo-classical theory
• Neo-Classical theory gave greater emphasis to
man behind the machine and stressed the
importance of individual as well as group
relationship in the plant or workplace.

• The neo-classical approach recognizes the

primacy of psychological and social aspects of
the workers as an individual and his relations
within and among groups and the organisation.
• It is the extended version of the classical
theory wherein the behavioural sciences gets
included into the management.

• The Neo-Classical theory posits that an

organization is the combination of both the
formal and informal forms of organization,
which is ignored by the classical
organizational theory.
• Human beings do not always act rationally. In
fact, the most irrational behaviour is when
they seek rewards from work.

• The neoclassical theory beautifully

incorporates behavioural sciences into the art
of management.
 Neoclassical Writers offered an
Organizational design as follows:
• Flat structure – The scalar chain is shorter.
Therefore, communication and motivation are more
effective.
• Decentralization – A decentralized structure allows
initiative and autonomy at the lower levels.
• Informal Organization – A formal organization
represents official channels of interactions. However,
it has many weaknesses. Therefore, an informal
organization can plug these loopholes and satisfy the
social and psychological needs of people.
 HAWTHORNE EXPERIMENT
• The HAWTHORNE EXPERIMENT conducted by
George Elton Mayo revealed that informal
organization as well as socio- psychological factors,
exercise a much higher influence on human
behaviour.

• Therefore, the findings focused their attention on

human beings and their behaviour in organization.
 HAWTHORNE EXPERIMENT
• The HAWTHORNE plant of the General Electric
Company, Chicago was manufacturing Telephone
system bell. It employed about 30,000 employees
at the time of experiments. There was dissatisfaction
among the workers and productivity was not up to
the mark. In order to find out the real cause behind
this, a team was constituted led by Elton Mayo.

• The aim was to study the relationship between the

physical working conditions and the productivity .
The entire experiment was conducted in four
phases:

• Illumination Experiment (1924-1927)

• Relay Assembly Test Room Experiment (1927-
1928)
• Mass Interviewing Programme (1928-1930)
• Bank Wiring Observation Room Experiment
(1931-1932)
 Illumination Experiment
• EXPERIMENTAL GROUP
Researchers increase the intensity of illumination
(group increased production)
Intensity of illumination was decreased
(production continued to increase)
• CONTROLLED GROUP
Constant intensities of illumination
(group increased production)
Constant intensities of illumination
(production continued to increase)

The production in the experimental group decreased only when

the illumination was decreased to the level of moonlight .
Illumination experiment was undertaken to find out how
varying levels of illumination at the workplace
affected the productivity.
Experiment:
• a group of workers were chosen and placed in two
separate groups.

• One group was exposed to varying intensities of

illumination. This group was named experimental
group as it was subjected to experimental changes.

• Another group was called controlled group as it

continued to work under constant intensities of
illumination.
• The researchers found that as they increased the
illumination of experimental group, both groups increased
production. When the intensity of illumination was
decreased, the production continued to increase in both the
groups. The production in the experimental group decreased
only when the illusion was decreased to the level of
moonlight.

• Thus, it was concluded the illumination did not have any

effect on productivity but something else was interfering with
the productivity. Therefore, another phase of experiments
was undertaken.
 Relay Assembly Test Room Experiment
It was designed to determine the effect of changes in
various job conditions on group productivity. For
these two girls were chosen and these girls were
asked to choose four more girls as co-workers
The work was related to the assembly of telephone
relays. Output depended on the speed and
continuity with which girls worked.
An observer was appointed with girls to supervise
their work . Following were the changes and
resultant outcomes.
• The incentive system was changed so that each
girl’s extra pay was based on the other five rather
than output of larger group, say, 100 worker or so.
The productivity increased as compared to before.

• Changes were made in rest intervals. Two to five

minutes of rest intervals were introduced one in
morning and other in evening session. These were
then increased in 10 minutes. The productivity was
increased.
• The rest period was reduced to five minutes but
frequency (morning, afternoon, evening) was
increased. The productivity was decreased slightly
and the girls complained that frequent rest intervals
affected the rhythm of the work.

• The number of rest was reduced of two of ten

minutes each, but in the morning, coffee or soup
was served along with sandwich and in the evening,
snacks was provided. The productivity increased.
• Changes in working hours and workday were
introduced, such as cutting an hour off the end of the
day and eliminating Saturday work. The girls were
allowed to leave at 4:30 pm instead of usual 5:00
pm . Productivity increased in this case.

As each changes was introduced absenteeism decreased,

morale increased and less supervision was required. It
was assumed that these positive factors were there
because of the various factors being adjusted and
making them more positive. When conditions were
reverted the productivity was supposed to decrease but
it increased further instead of decreasing.
• Thus, it was concluded that the productivity increased
not because of positive changes in physical factors
but because of change in girl’s attitude towards work
and their work group.
• They developed a feeling of stability, sense of
belongingness, responsibility and self-discipline
because of more freedom of work given to them.

• The relationship between workers and supervisors

flourished and became more friendly.
 Mass Interviewing program
• During the course of experiments, about 20,000
interviews were conducted between 1928 and 1930 to
determine employee’s attitude towards company,
supervision, insurance plans, promotion and wages.

• During the interviews, it was discovered that worker’s

behaviour was being influenced by group behaviour.

However, this conclusion was not

satisfactory and thus another set of experiment were
conducted.
Bank Wiring Observation room Experiment

• These experiment were conducted to analyze the

functioning of small group and its impact on individual
behaviour.
• A group of fourteen male workers were employed in the
bank wiring out of which nine wireman, three soldiers
and three inspectors. The work involved attaching wire
to switches for certain equipment used in telephone
exchange
• Hourly wage rate for each worker was based on
average output of each worker while bonus was to be
determined on the basis of average group output.
• The hypothesis was that in order to earn more
the workers will work more and in order to
gain more groups bonus they would help each
other in their work. But the hypothesis did not
hold valid.

• Workers decide the target for themselves

which lower than the company’s target.
The workers gave the following reasons for the
restricted output:
 Fear of unemployment: the fear among workers
was that if there would be more production per
head, some of the workers would be laid off.
 Fear of raising the standard: most of the workers
believed that if they will reach the standard rate of
production determined by the company, the
company may raise the standards reasoning that
it must be easy to attain.
 Protection of slower workers: the workers
were friendly on the job . Since slower
workers were likely to be retrenched, the fast
workers protect them by not overproducing.

 Satisfaction on the part of management: acc.

To workers management seemed to be accept
the lower production rate as no one was being
fired or even rebuked for restricted output.
• This study suggested that informal
relationships are an important factor in
determining the human behaviour. The
supervisor tended to understand and accept
the problems o workers and management
tried to sense their feelings which were helpful
in formulating the action for resolving
management employee conflicts.
 Prepositions of Neo Classical Theory
• The organization in general is a social system.
• There is co-existence of informal organization with
every formal organization and both affect each-other.
• Human beings are not independent, they are
interdependent in an organization.
• Human behaviour can be predicted in terms of social
and psychological factors.
• A conflict between organizational and individual goals
often exists which increase the importance of
integration between these two.
• Human being approach is not always rational
(not logical). Often they behave irrationally in
terms of rewards he seeks from the work.
(consider sentiments and emotions).

• Motivation of human being plays a key role in

the growth of the organization which is a
highly complex process.
Modern Theory (contemporary approach)

• This theory posits that an organization is a system that

changes with the change in its environment, both
internal and external.

• Modern approach of organizational behaviour

combines systems and contingency approach together.

• It takes valuable concepts of classical and neo-

classical approaches and integrates these with other
relevant concepts to organizational behaviour.
• Contemporary Approach

 Systems Approach
a) Closed System
b) Open System

 Contingency Approach
SYSTEM APPROACH
 System approach treats and organization as a open
system or its analysis . A set of interrelated and
interdependent parts arranged in a manner that
produces a unified whole.

 System approach recognizes that, no matter how

efficient the production department might be , the
marketing department better anticipate changes in
customer tasks and work with the product development
department in creating products customers want or the
organization overall performance will suffer.
• Closed system : this system is not influenced by or do not
interact with their environment.
1. It is self-contained and self maintaining because of lack of
outside interaction.
2. It lacks feedback mechanism. For exp (production line)

• Open System: an open system has continuous interaction

with environment.
1. It requires inputs for maintenance.
2. It imports information from the environment and has a
continuous feedback.
Exp: a corporation needs to gather resources and information
from its environment such as capital, employees, natural
resources and information from the market , govt. regulators
in order to function to grow.
 Contingency /Situational Approach
(if-then approach)
• System approach offers models which may not suit every
type of orga. (diff environments, competition, strength,
weakness, type, size.)

• A structure suitable for one unit may be suitable for

another.

• Contingency approach suggest that one size doesn't fits

all. (customization of strategies, structure, design, policies,
rules, because of a diff situation you face at diff period of
time)
• Structure or design must be tailor made as per the
unit .organization and situation.
• This approach suggests that needs, requirement, situations
of a particular organization should be considered while
designing an organizational structure.
The factors which influence an orga…..
 Environment
 Technology
 Size of operations
 People working in an orga
• Example:
if the production line is too good in an
organization and the consumers are not
satisfactory according to it, then the manager
of an organization should use the contingency
approach in order to maintain the situation in
the best way.